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As everything from designing buildings to manufacturing engines is transformed by digital processes, the metamorphosis of ideas into innovations has accelerated. What is more, the pace at which technologies and business models are outstripping each other is upending entire industries, often causing significant disruption. Digitalization is driving many of these disruptive changes. And Siemens is actively shaping this development – yet remaining true to one of its most cherished traditions: Setting store by brilliant minds as the source and engine of every innovation.
Ideas alone have little value. An innovation’s importance lies in its practical implementation, in the intellectual work expended on it, and in the labor and money spent on it.
Werner von Siemens, 1865
This is as true today as it was when Werner von Siemens invented the pointer telegraph, which dramatically sped up the transmission of messages. Von Siemens – who would have turned 200 in 2016 – translated an idea into a technology that turned out to be revolutionary. Today we speak of disruption, the buzzword of our times when it comes to innovation. And for good reason. After all, never have technologies and business models that significantly change their industry superseded each other as quickly as they do now in the age of digitalization. What applies today can easily become obsolete tomorrow. Companies that only develop and constantly improve existing technologies are at risk of quickly falling behind. Often it is start-ups that redefine the rules of the markets in which large corporations operate. That is because ingenuity and speed are the special strengths of these young companies.
In order to remain one of the world’s most innovative companies, Siemens is increasingly adopting a start-up mindset. Siemens has bundled its existing commitment to start-ups within next47, the new unit founded in October 2016, and is opening itself up to disruptive ideas. The focus is on the fields of artificial intelligence, autonomous machines, connected (e-)mobility, distributed electrification, and block chain applications. next47 has been given a high level of autonomy, but it also enjoys access to customers thanks to its proximity to Siemens, and can quickly try out new concepts in real-life industrial settings. Jeremy Herrman, co-founder and CTO of the start-up Plethora, for example, praises the teamwork with Siemens: “It’s great to have an opportunity to access support and software for free. Not many huge companies have that kind of collaboration culture.” Plethora, a San Francisco based start-up, has developed Plugins for the most widely used CAD programs that extremely accelerate the process of prototyping.
Network with others, develop things through collaboration, and respond to those who say, “That won’t work” with “No such thing!” These are the characteristics of people who have won the Inventors of the Year award. “When you develop something new, you invariably come across problems and many solved problems eventually lead to a patent,” is how Jean-Mary Martel describes the road to innovation. His design for an intelligent fire protection circuit breaker for low-voltage equipment has led to his being named as “Inventor of the Year” in the “Talent” category.
It takes this kind of openness to innovative ideas, whether they come from inside or outside the company, for Siemens to be successful in an environment characterized by acceleration, disruptive technologies, and new business models. In this environment, Siemens relies on one constant: ingenious minds that develop their ideas into innovations. This way, Siemens will not only allow digitalization to happen, but will actively shape it.
Lak Ananth is a Pathfinder. Well, no longer by name but certainly still by nature. A year ago Ananth, the current head of next47, a global venture firm created by Siemens, left his position at Pathfinder, the venture capital and partnership unit of Hewlett Packard Enterprise, to take on a new challenge. We sat down with him to find out more about the man and his mission.
Mr. Ananth, you’ve headed next47 for more than one year now. What’s been achieved during this time?
We’ve been busy! In the past 6 months, we’ve added new leadership, made new investments and expanded our network in order to deliver on our mission of identifying and creating next generation businesses for Siemens. For instance, we’ve attracted the President & CEO of Siemens Canada and the CEO of Siemens’ Energy Management division in Brazil. They will be leading our Catalyst program, which connects start-up entrepreneurs to Siemens technologies and the global customer ecosystem. We’ve opened our office in Palo Alto and are in the process of opening another office in London. We’re also continuing to build our networks in emerging start-up ecosystems, such as Israel, Brazil and India.
What major investments have you made?
We have been very active on the investment front. We completed next47’s first core investment in Markforged, a leader in the additive manufacturing space, where we led the round and took a seat on their Board. And we will soon be announcing another exciting investment, this time in the autonomous driving space. In addition to these core investments, our team has worked hand-in-hand with Siemens Business Units to complete 7 new investments and 8 follow-on financing rounds.
next47 will make Siemens as accessible as a small and nimble company for our start-up partners.
Lak Ananth, Managing Partner next47
Making successful investments demands an entrepreneurial mindset. What are you doing to ensure that you have the intellectual firepower to accomplish this?
In addition to working with external startups, we have developed a program for identifying entrepreneurial potential within the company and providing “intrapreneurs” — i.e. employees with an entrepreneurial mindset — with professional support as they take their first steps. The program is very ambitious. It’s a major strategic initiative that will enable Siemens to open up and shape future fields of business.
Speaking of intellectual firepower, is there a connection here in terms of your partnership with Techstars?
Absolutely! Techstar is one of the most globally successful accelerators. We’ve already created our first two companies in this field: EcoG, which aims to integrate electric charging stations and monetize them with the help of services, and RealSynth, which plans to promote the development of artificial intelligence for rail systems. I’m looking forward to seeing how these companies develop as the accelerator program progresses.
What is your vision for next47?
We’ve built next47 differently, as a new-style innovation unit with access to the global resources and customer base of Siemens. We also have a worldwide team with specific engineering, sales, support, and marketing expertise to help startups through the heavy lifting phase of their development.
And like all top-tier innovation ecosystem players, we are incentivized to build something big. We move fast, make our own investment decisions, and are aligned with the teams we invest in; identical to a brand-name venture firm. In that way, we have not only the resources to contribute meaningfully to a smart syndicate but also the motivation to take every startup we work with to the next level. Everyone wins: founders, Siemens, our customers, our co-investors, and our own people, who are working together to change the world.
In what ways will next47’s start-ups benefit from what you are doing?
next47 will make Siemens as accessible as a small and nimble company for our start-up partners. At the same time, it will bring the awesome customer trust, reach, and accumulated knowledge of a large company to the table — characteristics that include global presence, name recognition in regional markets, customer access, proprietary use cases, and prototype development paired with deep vertical know-how, to name just a few. We have the ability to form a great business from just an idea in a short time. We can offer access to some of the world’s most sought-after clients, including Siemens.
They are newcomers with creativity, dedication, and enthusiasm for technologies. They are experts who think and work with an interdisciplinary mindset and shun the beaten path. Their innovations have set new standards or opened up new business applications. What the Inventors of the Year have in common is their ability to prove that there is no such thing as “That won’t work” and that often it is the unconventional approaches that result in innovations.
The digital portfolio consists of software for different domains, digital services, digital platforms and offerings for digitally enhanced electrification and automation. Siemens offers its customers a broader range than any other company.
And with MindSphere Siemens offers a cloud-based, open operating system for developing applications. It supplements the company's digitalization strategy with another important component. MindSphere allows for innovative solutions, making it possible to bring products to market more quickly and more efficiently, with better quality. As a result, it can help improve the efficiency of systems by collecting and analyzing huge amounts of production data. Mechanical engineers and plant engineers can use the platform to monitor machine fleets spread across the world for service purposes, reduce their downtimes, and thus offer new business models. It also forms the basis for data-based services from Siemens and third parties, such as predictive maintenance, energy data management or optimization of resources.
With MindSphere Siemens is gaining further momentum in digitalization. It is the first company worldwide to set up 20 centers for digital customer applications in the industrial sector. Each of these MindSphere Application Centers for digital offerings from Siemens spans multiple locations in different countries and specializes in a particular industry in which Siemens is active. Today, around 940 software developers, data specialists and engineers are already working together with Siemens customers at these centers to develop digital innovations for data analysis and machine learning. To be close to its customers, the company has distributed its 20 centers across 57 locations in 17 countries.
However, MindSphere can be used not only by industrial companies, but also by cities of any size to analyze data for optimizing processes. One of the first places where this is being done is the Southeast Asian city-state of Singapore, which wants to become a smart nation with the help of Siemens. To support this master plan, Siemens began to set up a MindSphere Application Centre on July 11, 2017.To this end, Singapore will become the first country in the world to use MindSphere in a pilot project that will largely digitalize the city-state's infrastructure.
In the mid-19th century, a small, square box weighing about ten kilograms marked the birth of the pointer telegraph. The device, which was developed by artillery officer and inventor Werner von Siemens in a backyard in Berlin in 1847, ushered in a new era of electric telegraphy. The protagonist of this story had a mindset similar to that of today’s start-up founders; it was characterized by an unshakable faith in his innovation, his skill, and a venturesome spirit, which was not dampened by early failures. “I am now firmly resolved to make a strong career out of telegraphy,” he wrote to his brother William in December 1846. Indeed, only five months after he filed a patent for his telegraph in May 1847, he and Johann Georg Halske founded “Telegraphen-Bauanstalt von Siemens & Halske.” In the following year, the young company was awarded a contract to build Prussia’s first electric telegraph line from Berlin to Frankfurt am Main. One year later, news of the resolutions of the Frankfurt National Assembly, the first German parliament, was telegraphed across a distance of roughly 500 kilometers to Berlin in less than an hour. In those days, this was a veritable sensation and became the basis for the later worldwide fame of “Telegraphen-Bauanstalt von Siemens & Halske.”
Siemens celebrated the 200th birthday of its founder in 2016 and the 170th anniversary of its establishment in 2017. Werner von Siemens’ legacy continues to this day, in the many brilliant minds that stand behind the Siemens name and are responsible for the company’s innovative strength.
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